The Openpay Group Ltd (ASX: OPY) share price is climbing higher on Tuesday following the release of an update.
At the time of writing the buy now pay later provider's shares are up 4% to $1.28.
Why is the Openpay share price climbing higher on Tuesday?
This morning the Afterpay Ltd (ASX: APT) rival released an update on its performance in the first half of FY 2020 and its expectations for the full year.
According to the release, Openpay expects to report first half revenue of $8.4 million, which is up 73% on the prior corresponding period.
The company also expects to report a sizeable jump in operating expenses. Openpay recorded first half unaudited operating expenses of $28.4 million.
This was due to some one-off costs relating to its IPO and consultant expenses, as well as investments in its growth. The latter includes significant investments in the technical platform to enable its B2B launch and in its corporate infrastructure in the UK.
These investments are now being leveraged and are expected to support the company's growth going forward.
For example, earlier this month the company announced its launch into the B2B sector with an inaugural agreement with Woolworths Group Limited (ASX: WOW).
Openpay For Business is a Software-as-a-Service (SaaS) solution which allows companies to manage trade accounts end-to-end. This includes applications, credit checks, approvals, and account management in the one system.
Under the agreement, Woolworths will roll out the Openpay For Business solution across its payments and digital platform, as part of Woolworths' business-to-business service.
Outlook.
The release advises that the company has continued to deliver strong growth in January, with Total Transaction Value (TTV) and revenue for the month coming in at $15.7 million and $1.9 million, respectively.
This implies growth rates of 86% and 58% respectively over the prior corresponding period.
It also notes that its largest retail merchant, Wesfarmers Ltd (ASX: WES) subsidiary Bunnings, increased its TTV with Openpay by 150% in December compared to a year earlier.
Looking further ahead, Openpay currently estimates a full year loss before tax in the range of $35 million to $40 million.
Management notes that its available cash at the end of January stood at $46.3 million, which it believes provides the company with a significant runway to continue to fund operating expenses and grow the business.
